OPINION OF ADVOCATE GENERAL
ALBER
delivered on 6 March 2003 (1)
Case C-34/02
Sante Pasquini
v
Istituto Nazionale della Previdenza Sociale (INPS)
(Reference for a preliminary ruling from the Tribunale ordinario di Roma (Italy))
((Social security – Old-age pensions – Recalculation – Recovery of sums paid though not due – Limitation – Law applicable))
I ─ Introduction
1. This reference for a preliminary ruling was made by the Tribunale ordinario di Roma (Rome District Court) (Italy). The parties to the main proceedings are Sante Pasquini (hereinafter the applicant) and the Istituto Nazionale della Previdenza Sociale (National Institute of Social Insurance) (hereinafter the INPS). The defendant stopped pension payments to the applicant, who lives in Luxembourg, in order thus to offset what it considers to be overpayments of pension benefit. This case concerns the question whether the recovery of backdated pension payments is subject to time-limits under Community law.
II ─ Applicable provisions
A ─ Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community
2 In the version contained in Council Regulation (EC) No 118/97 of 2 December 1996 amending and updating Regulation (EEC) No 1408/71 (OJ 1997 L 28, p. 1). Community legislation
2. According to its heading, Article 49 governs the [c]alculation of benefits where the person concerned does not simultaneously satisfy the conditions laid down by all the legislations under which periods of insurance or of residence have been completed or when he has expressly requested a postponement of the award of old-age benefits. The provision states: 1. If, at a given time, the person concerned does not satisfy the conditions laid down for the provision of benefits by all the legislations of the Member States to which he has been subject, taking into account where appropriate Article 45 and/or Article 40(3), but satisfies the conditions of one or more of them only, the following provisions shall apply:
(a) each of the competent institutions administering a legislation whose conditions are satisfied shall calculate the amount of the benefit due, in accordance with Article 46;...2. The benefit or benefits awarded under one or more of the legislations in question, in the case referred to in paragraph 1, shall be recalculated automatically in accordance with Article 46, as and when the conditions required by one or more of the other legislations to which the person concerned has been subject are satisfied, taking into account, where appropriate, Article 45 and taking into account once again, where appropriate, paragraph 1. ...3. A recalculation shall automatically be made in accordance with paragraph 1, without prejudice to Article 40(2), where the conditions required by one or more of the legislations concerned are no longer satisfied.
3. Regulation No 1408/71 expressly lays down no time-limits for the recovery of any benefits paid but not due. In this connection, the national court refers to the provisions of Article 94 et seq. of that regulation, expressly cited by the applicant, which contains transitional and final provisions. With regard to any benefits or rights in respect of periods prior to the entry into force of the regulation, the first subparagraph of Article 94(6) provides:If an application referred to in paragraph 4 or 5 is submitted within two years from 1 October 1972 or from the date of its application in the territory of the Member State concerned, the rights acquired under this Regulation shall have effect from that date, and the provisions of the legislation of any Member State concerning the forfeiture or limitation of rights may not be invoked against the persons concerned.Council Regulation (EEC) No 574/72 of 21 March 1972 laying down the procedure for implementing Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community (3)
4. According to the heading of Article 111, Articles 111 and 112 of that regulation govern the [r]ecovery by social security institutions of payments not due, and claims by assistance bodies.Article 111 reads as follows: 1. If, when awarding or reviewing benefits in respect of invalidity, old-age or death (pensions) pursuant to Chapter 3 of Title III of the Regulation, the institution of a Member State has paid to a recipient of benefits a sum in excess of that to which he is entitled, that institution may request the institution of any other Member State responsible for the payment of corresponding benefits to that recipient to deduct the amount overpaid from the arrears which it pays to the said recipient. The latter institution shall transfer the amount deducted to the creditor institution. Where the amount overpaid cannot be deducted from the arrears, the provisions of paragraph 2 shall apply.2. When the institution of a Member State has paid to a recipient of benefits a sum in excess of that to which he is entitled that institution may, within the conditions and limits laid down by the legislation which it administers, request the institution of any other Member State responsible for the payment of benefits to that recipient to deduct the amount overpaid from the amounts which it pays to the said recipient. The latter institution shall make the deduction under the conditions and within the limits provided for such setting-off by the legislation which it administers, as if the sums had been overpaid by itself, and shall transfer the amount deducted to the creditor institution.3. When a person to whom the Regulation applies has received assistance in the territory of a Member State during a period in which he was entitled to benefits under the legislation of another Member State, the body which gave the assistance may, if it is legally entitled to reclaim the benefits due to the said person, request the institution of any other Member State responsible for the payment of benefits in favour of that person to deduct the amount of the assistance paid from the amounts which the latter pays to the said person....The institution responsible for payment shall make the deduction under the conditions and within the limits provided for such setting-off by the legislation which it administers, and shall transfer the amount deducted to the creditor body.Article 112 reads:When an institution has made payments which are not due, either directly or through another institution, and when their recovery has become impossible, the amounts in question shall remain finally chargeable to the first institution, save where the payment which was not due is the result of fraud.
5. Article 49 of Regulation No 574/72 governs the recalculation of benefits and paragraph 2 thereof provides:2. In the event of recalculation, withdrawal or suspension of a benefit, the institution which has taken such a decision shall immediately notify the person concerned and each of the institutions on which the person concerned has a claim, if necessary through the good offices of the investigating institution. The decision must specify the grounds and time-limits for appeal provided for by the legislation in question. Periods allowed for appeals shall commence only on the date of receipt of the decision by the person concerned.
B ─ National legislation
Law No 153/1969
6. It is common ground between the parties to the proceedings that the legal basis for payment of the supplement up to the level of a minimum pension is Article 8 of Law No 153/1969. Paragraph 1 of that provision relates to Italo-Libyan pension situations, which are of no significance in this case. Paragraphs 2 to 4, which, the parties all agree, also apply to pension claims acquired other than under the Italo-Libyan pensions agreement, read in essence as follows:The minimum pensions referred to in the previous paragraph are also to be payable to persons receiving a pension who have acquired that right by virtue of the aggregation of periods of insurance and contributions provided for by international agreements or conventions on social insurance. For the purposes of the award of those minimum pensions, account is to be taken of the amount of pension, if any, paid pro rata by virtue of that aggregation by foreign insurance bodies.Emigrant workers who satisfy the conditions necessary for entitlement to a pension by virtue of the aggregation of periods of insurance and contributions referred to in the second paragraph are to be entitled, inter alia on the basis of the certificate issued by the competent foreign bodies, to the payment of an advance on the pension, which is to be added to until the minimum pension is reached. Persons receiving other pensions are not to be entitled to that supplement and it is to be recovered on the basis of the sums which may have been paid pro rata by the foreign insurance bodies.
7. The parties to the proceedings also refer to the following national provisions, the applicability of which in this case is disputed.
Codice Civile
8. Article 2946 of the Codice Civile (Italian Civil Code) lays down a general limitation period of 10 years in respect of debts.
Royal Decree No 1422/1924
9. Article 80 of Royal Decree No 1422/1924 reads in essence as follows:The Committee ( comitato esecutivo della cassa nazionale per le assicurazioni sociali (Executive Committee of the National Social Insurance Fund)) is to use all appropriate means to review pension payments by welfare institutions. The Committee may order the revocation or correction of pension payments already made, or the suspension of payments where it takes the view that additional inquiries are needed.Pension payments are to be considered final where they have not been refused by the National Social Insurance Fund within a year of notification to the recipient; in that event, subsequent corrections of any errors other than those resulting from fraudulent conduct on the part of the person concerned are not capable of affecting payments already made.
Law No 88/1989
10. Article 52 of Law No 88/1989, which is entitled undue benefits, provides in essence as follows:
1. Pensions payable inter alia by the general compulsory insurance scheme may be corrected at any time by the institution making the payment if any errors have been made in the award or reassessment of the benefit.
2. Where the abovementioned correction shows that undue pension payments have been made, these are not to be recovered unless the sums unduly received are the result of fraudulent conduct on the part of the person concerned.
Law No 412/1991
11. Article 13(1) and (2) of Law No 412/1991 provides in essence as follows:
1. The provisions laid down in Article 52(2) of Law No 88 of 9 March 1989 are to be interpreted as meaning that the correction provided for applies to sums which were paid on the basis of a formal and final decision expressly notified to the person concerned and vitiated by an error of any kind for which the institution making the payment is to be held responsible, except where the sums paid though not due are the result of fraudulent conduct on the part of the person concerned. Failure on the part of the person in receipt of the pension to communicate, or incomplete communication, of facts which are relevant to entitlement to the pension or to its amount and which are not already known to the competent body authorises the latter to recover the sums paid though not due.
2. Once a year, the INPS is to review the income of persons in receipt of pensions and its effect on the amount of or entitlement to pension payments; during the course of the following year the INPS is to take steps to recover any sums overpaid.
Law No 662/1996
12. Finally, Article 1(260) to (262), (264) and (265) of Law No 662/1996 provides in essence as follows:
260. No action to recover sums paid though not due is to be taken against persons who have received pension benefits wholly or partly undue, including cash awards, paid inter alia by a compulsory insurance body in respect of periods before 1 January 1996, if in 1995 those persons had an income subject to IRPEF (personal income tax) of ITL 16 million or less.
261. If persons who in 1995 received undue benefits for the purposes of subparagraph 260 had an income subject to IRPEF of over ITL 16 million, only one quarter of the amount cannot be recovered.
262. Recovery is to be effected in the form of a deduction from the pension, which deduction may not exceed one fifth of the pension. The debt is to be recovered by means of interest-free monthly instalments within a period of 24 months. That period can be extended in order to ensure that the deduction does not exceed one fifth of the pension. The last sentence of subparagraph 264 states in essence:Monthly recovery is to be effected in accordance with Article 3(1) of Presidential Decree No 1544 of 30 June 1955 within a maximum period of five years.Subparagraph 265 states that, in the event of fraudulent misrepresentation by the recipient, the full amount is to be recovered.
Law No 448/2001
13. By means of Article 38(7) and (8) of Law No 448/2001, the Italian legislature adopted rules similar in substance to those of the abovementioned Law No 662/1996 for the period before 1 January 2001, fixing the threshold for taxable income in the year 2000 at EUR 8 262.31.
III ─ Facts and procedure
14. In the course of his working life, the applicant pursued paid employment in Italy, France and Luxembourg. He completed, in turn, 140 weeks of employment subject to compulsory insurance in Italy, 336 in France and, lastly, 1 256 in Luxembourg. For the period following his 60th birthday, he applied for an old-age pension, which the Italian institution was the first to grant him, on a pro rata basis, with effect from 1 March 1987. The Italian pro rata pension was topped up by a supplement to bring it up to the level of an Italian minimum pension. By decision of 26 July 1988, the Italian institution recalculated the Italian pension in the light of the French pro rata pension which had also become due on 1 March 1987. The applicant continued to receive a supplement to his Italian pro rata pension.
15. With effect from 1 July 1988, the Luxembourg institution, too, granted him an old-age pension. It did not directly inform the Italian institution that the Luxembourg old-age pension had become due. Following an inquiry by the Italian institution on 1 September 1998 asking to be informed of the payments made since 1 January 1996, the Luxembourg institution sent the requested information on 10 September 1998. In the correspondence that followed, the Luxembourg institution, by letter of 17 November 1999, expressly informed the Italian institution of the Luxembourg pension payments made since 1 July 1988. On 3 March 2000, the Italian institution recalculated the Italian pension in the light of the Luxembourg pension and reduced the amount of the former to ITL 7 500 per month, applicable with retrospective effect to 1 July 1988. In that decision it ordered the recovery of an amount equal to EUR 29 005 in respect of the period from 1 March 1988 to 30 April 2000.
16. On 30 October 2000, the applicant brought an administrative appeal against that latter decision which was rejected by decision of 13 December 2000. The Italian institution considered both the recovery of the sums paid though not due and the consequential cessation of all pension payments by the Italian institution to be lawful.
17. The applicant takes the view that that assessment infringes national rules on limitation periods and exemption. He therefore brought a judicial action seeking an order that he continue to be paid a partial pension by the Italian authorities. The national court before which he brought the action has doubts as to whether or not the unlimited recoverability of sums paid though not due, which is said to follow from national law, is compatible with Community law where payment of the sums allegedly undue results from the concurrent application of various national pension schemes, in accordance with Community law. The referring court would like to know whether or not the two-year time-limit applicable to the retrospective enforcement of rights conferred by Regulation No 1408/71 can, in the appropriate circumstances, also be applied, by analogy, to a situation such as that in this case.
18. More specifically, the referring court words its questions as follows:Is a provision of national law which provides, without any time-limit and thus in breach of the principle of legal certainty, for the recovery of an undue payment arising from the application of Community legislation compatible with the objectives of Council Regulations No 1408/71 and No 574/72?Are the Community provisions cited in (1) to be interpreted as precluding the application of a provision of national law which does not lay down time-limits for the recovery of undue payments arising from the belated or improper application of the relevant Community provisions?Is it possible, given that the transitional rules for the application of the social security regulations provide for a time-limit of two years in which to claim, with retrospective effect, the rights conferred by those regulations, to apply a contrario the same time-limit of two years from notification of recovery of undue payment in cases of reduction of rights previously conferred, except where more favourable time-limits are laid down by national law, and provided that the person concerned is not guilty of fraudulent conduct?
IV ─ Submissions of the parties to the proceedings
A ─ Applicant
19. The applicant refers to the Italian provisions cited above. He contends that those provisions, which take precedence over the general rule contained in Article 2033 of the Codice Civile, are applicable to his case, and that he therefore does not have to reimburse to the institution any payments which may have been received by him in error because he received them in good faith.
20. The applicant submits that, after he had already started to draw his Italian pension, the Luxembourg institution informed both the Italian and French institutions that he had applied for a Luxembourg and a French pension and had taken early retirement.
21. He contends that there is nothing which he personally omitted to do, having informed the Italian institution by means of a letter of 18 October 1988 from the Patronato A.C.L.I. (the Italian workers' social assistance body in Luxembourg) that he was in receipt of a Luxembourg pension. He sent the Italian institution a copy of the decision to award the benefit and asked that institution to take the Luxembourg benefit into consideration in order to rule out any right to reimbursement assertible against him.
22. He maintains that recovery of the sums paid though not due is contrary to the principles laid down in Regulations No 1408/71 and No 574/72. Although the institution was informed of the situation, it recalculated the benefit with 13 years' retrospective effect to 3 March 2000, which is contrary to Article 49 of Regulation No 574/72.
23. The applicant refers to the judgments in Rzepa (4) and Cabras . (5) In both judgments, he submits, the Court referred to the relevant national legislation, but did not comment on limitation periods prescribed by Community law. In this respect, he contends, a distinction must be drawn according to whether national legislation alone is applicable or whether Community law is also involved. By reference to the judgment in Petroni , (6) the applicant takes the view that it is the duty of the Council, in the exercise of its jurisdiction under Article 42 EC, to adopt rules on undue payment. Failure to do so could be regarded, in accordance with the judgment in Vougioukas , (7) as an infringement of the Council's obligations under the Treaty.
24. The applicant nevertheless contends that an answer can also be inferred from Article 94 et seq. of Regulation No 1408/71 and Article 49 of Regulation No 574/72. Article 49 of Regulation No 574/72 requires the competent institutions to notify the person concerned of a recalculation immediately. However, the majority of sums paid though not due are the result of an incorrect or belated application of that provision. It is his submission that, if the competent institution does not observe that rule, thereby leaving the insured persons in legal uncertainty indefinitely, it must bear the consequences, in that it may not recover the sums overpaid as a result of error or negligence.
25. The applicant notes that Articles 94, 95, 95a and 95b of Regulation No 1408/71 allow the beneficiary a period of two years in which to seek to have the regulation applied in his favour. In his view, that period can be applied a contrario if his rights are changed unfavourably. He argues that claims for the recovery of sums paid though not due should be limited to a period of two years from notification of the decision in respect of the sums paid though not due, without prejudice to any more favourable national provisions. In view of the different rules applicable in the fifteen Member States, he submits that it should not be left to the social insurance institutions to determine the procedure for recovering sums paid though not due in the field of social insurance and to prescribe the relevant limitation periods.
B ─ INPS
26. With regard to the facts of the case, the INPS explains that the applicant's administrative appeal was rejected on the ground that Article 13 of Law No 412/1991 is not applicable to the recovery, as a result of the award of a foreign pension, of sums paid though not due in connection with the pension supplement, since, at the time when the benefit was granted, the beneficiary was informed that the amount of the benefit was provisional, in accordance with Article 8 of Law No 153/1969. In the dispute before the Tribunale di Roma, the INPS argued that the exemption rules were not applicable in respect of the period before 1 December 1995 and Article 13 of Law No 412/1991 was not applicable in respect of the period thereafter.
27. The INPS has submitted to the Court that the reference for a preliminary ruling appears to be inadmissible and unfounded because it does not adequately state the reasons on which it is based. It argues that the referring court has not adequately examined the dispute in the main proceedings, with the result that the conditions governing the making of a reference to the Court have not been fulfilled.
28. As regards the substance of the case, the INPS takes the view that the right to a benefit equal to the minimum income is dependent on the amount of any benefit from a foreign institution. Since the amount of the benefit at issue was determined provisionally, it could be reduced at a later date and the sums overpaid in the light of the foreign pension could be recovered. After summarising the chronology of the events surrounding the award of the pension to the applicant, (8) the INPS takes the view that the institution cannot be accused of having reassessed the benefit belatedly. It maintains in this connection that the documents before the Court do not contain any notification by the applicant, through the intermediary of the Patronato A.C.L.I., that he was in receipt of the Luxembourg pension.
29. The INPS also points out, however, that, in its defence in the main proceedings, it, like the administrative appeal body before it, recognised that Article 1, subparagraph 260 et seq. of Law No 662/1996 is applicable, as the applicant claimed in his application. Under those provisions, he would have been protected against the recovery of sums paid though not due if his taxable income in 1995 had been less than ITL 16 million, or only three quarters of the amount of those sums could have been recovered if his income had exceeded that amount. More recent legislation has confirmed and extended the substance of the exemption rule. The dispute before the referring court could therefore have been resolved on the basis of the provisions in force, especially since, in circulars ( circolari) No 96 of 17 April 1997 and No 84 of 24 April 2002, the INPS expressly recognised the applicability of those provisions to pensions awarded pursuant to Article 8 of Law No 153 of 30 April 1969.
30. Aside from that, the INPS is required to undertake an annual review of the income of persons in receipt of a pension with a view to identifying any impact this may have on their pension rights. In the event of overpayment, recovery must be effected the following year.
C ─ The Italian Government
31. The Italian Government too points out, inter alia , that the Italian pension supplement was awarded provisionally, on the understanding that it would be recalculated as from the award of a foreign pension and that any sums overpaid would be recovered.
32. It refers to judgment No 1967 of 1995 of the Corte di Cassazione (Italian Court of Cassation) in which that court made it clear that Article 8 of Law No 153 of 1969 is a specific mechanism for granting benefits. The award is made on the assumption that, where an advance is paid on the benefit, the definitive benefit will be recalculated and, therefore, adjusted at a later date. The recovery of sums overpaid is a possibility inherent in the scheme of Article 8, which therefore constitutes a specific and separate ground for recovery.
33. The Italian Government contends that the referring court's questions are based on the assumption that the Italian legislation permits the recovery of sums paid though not due without temporal limitation. This is wrong. In Italian law, barring any special rules, the general limitation period of 10 years is applied, pursuant to Article 2946 of the Codice Civile. Member States have discretion in the determination of limitation periods. The period laid down by the Italian legislature is not contrary to the provisions or principles of Community law.
34. Moreover, it submits, the INPS has not committed any error which justifies the protection of a worker who has received a benefit in good faith. Rather, the INPS made payments for which it was not liable and which it is now recovering under the general provisions on sums paid though not due (Article 2033 of the Codice Civile).
D ─ The Austrian Government
35. The Austrian Government points out first of all that, unfortunately, the order for reference does not contain all the information needed to assess the case fully. It must nevertheless be recognised, it submits, that the issue raised regularly leads to difficulties in Austria too.
36. The Austrian Government observes that there is no European law of procedure. It is therefore primarily national procedural law which is applicable when it comes to asserting rights guaranteed by Community law, provided that the principles of equivalence and effectiveness are taken into account in the process. (9) It takes the view that the answer to the question whether or not the recovery of sums paid though not due can be effected without temporal limitation depends, first, on the relevant provisions of Italian procedural law. The principle of respect for legitimate expectations should also be taken into consideration. The Austrian Government refers in that connection to Cabras (10) and in particular to the Opinion of Advocate General Jacobs in that case. (11) The Republic of Austria submits that it is also worth considering whether it is possible to deduce in a general way from the transitional provisions of Regulation No 1408/71 that retrospective effect is limited to two years in respect of all the legal consequences for migrant workers. After all, those provisions (Article 94, for example) contain not only rules applicable to the circumstances specifically mentioned in them, but also general procedural principles for the application of the regulation. (12) Those transitional provisions constitute rules which are also intended to relieve insurance institutions from the unreasonable burden of liabilities with excessive retrospective effect. By analogy, that principle could also be applied, a contrario , to the reimbursement obligations of the persons concerned.
37. After all, it submits, it is precisely those persons with insurance histories in more than one Member State who, as a result of the concurrent application of various legal systems, are generally placed at a disadvantage by comparison with workers who have only ever been insured in one Member State. From that point of view, there is justification for special protection of migrant workers' legitimate expectations, (13) which might include, inter alia , the limitation to two years of the retrospective effects possible in principle at national level. The Republic of Austria would support such a solution because, it submits, it is difficult to explain to the migrant workers concerned that, although they have done nothing wrong, they can be required to repay, without temporal limitation, overpayment of benefits, when those sums are largely the result of the overlapping of the differing and extremely complex social security laws of the various Member States, and not of their own personal actions.
E ─ The Portuguese Government
38. The Portuguese Government too refers to the case-law of the Court, (14) which states that, in the absence of Community rules, it is for the legal system of each Member State to designate the authorities having jurisdiction and the procedures to be followed, provided that the principles of equivalence and effectiveness have been observed. That applies also in principle to the recovery of social security benefits. The recovery of sums paid though not due is therefore governed by national provisions. In view of the principle of equivalence, the same provisions must be applied as are applicable to national benefits of the same kind.
39. In view of the principle of effectiveness, it contends, the fact is, however, that the lack of limitation periods for the recovery of sums paid though not due ─ especially in the context of the reduction of previously recognised rights as a result of the belated or incorrect application of provisions of Community law ─ is contrary to Article 49(2) of Regulation No 574/72 and the principle of legal certainty. According to the case-law of the Court, (15) that principle is intended to protect both the authorities and individuals. National law must therefore set an appropriate time-limit after the expiry of which the legal position of the individual is consolidated.
40. If, however, national law does not provide for such a time-limit, then Community law at least gives some guidance as to how the question should be answered, as the referring court already suggests. Article 94(6) of Regulation No 1408/71, for example, gives expression to the principle of legal certainty for the benefit of social insurance institutions. With a view to protecting the recipients of benefits, that rule can be applied a contrario so that the time-limit for the recovery of benefits paid though not due in the field of social security may not exceed two years. The time-limit for the retrospective recovery of sums paid though not due may therefore not exceed two years as from the date of notification of the person concerned, without prejudice to any more favourable national limitation periods.
F ─ The Commission
41. The Commission did not express doubts as to the admissibility of the reference for a preliminary ruling until the hearing. In its written observations, it was still proceeding on the premiss that this case is essentially concerned with an issue of equal treatment as between situations governed by Community law and situations governed purely by national law.
42. At the hearing, on the basis of the written and oral submissions, in particular of the INPS, the Commission said that it was possible that the national exemption rules are applied without discrimination and that, on the ground of his income alone, the applicant does not qualify for exemption under those rules. Consequently, the reference for a preliminary ruling suggests that there has been unequal treatment but then proceeds on incorrect assumptions, which throws serious doubt on its admissibility.
43. Even in its written observations, however, the Commission had taken the view that the reference for a preliminary ruling does not reflect the true nature of the dispute inasmuch as it takes as its basis limitation periods for the recovery of sums paid though not due, when the case actually concerns the applicability of the national exemption rules in matters of social security. The Commission's written submissions are given over largely to whether those rules can also be applied in full to situations governed by Community law.
V ─ Assessment
A ─ Admissibility
44. The INPS has from the outset voiced doubts as to the admissibility of the reference for a preliminary ruling, on the one hand, because of the brevity of the order for reference, which gives an inadequate account of the issues in the main proceedings, and, on the other, because, in the INPS's opinion, the questions referred are not relevant to the resolution of the dispute before the national court. The INPS contends that the dispute pending before that court can be satisfactorily resolved on the basis of national law alone. On account of the cursory account of the issues in the order for reference, the Austrian Government likewise did not consider itself able to adopt a definitive position. Lastly, the Commission raised objections to the admissibility of the reference for the first time at the hearing. It too has doubts as to whether the questions referred to the Court are relevant to a satisfactory resolution of the dispute.
45. According to the settled case-law of the Court, (16) it is for the referring court to consider the relevance of the reference for a preliminary ruling. Where there are any doubts as to whether the questions have been properly put for the purposes of assessing the case under Community law, the Court can, if necessary, reword them. According to settled case-law, (17) the Court in any event tries to give the referring court clarifications to guide it in its assessment of the dispute pending before it.
46. Only where the questions submitted to the Court are clearly irrelevant to the resolution of the dispute in the main proceedings, for example where the dispute is fictitious or the questions asked are purely hypothetical, (18) does the Court reject a reference for a preliminary ruling as inadmissible because it does not consider itself competent to deliver advisory opinions in the context of a preliminary ruling procedure. (19)
47. There is nothing in the order for reference to indicate that this is a fictitious dispute or that the questions asked are hypothetical. What the order for reference does show is that the applicant in the main proceedings has already expressed the view, before the referring court, that recovery of the Italian pension benefits is contrary to the spirit and purpose of Community law, as expressed in the preambles to Regulations No 1408/71 and No 574/72. Before the Court, he went so far as to express the view that the lack of a limitation period under Community law for the recovery of sums paid though not due could in certain circumstances be regarded as an infringement of the Council's obligation to coordinate social security schemes under Article 42 EC. In any event, a satisfactory solution should be available under Community law, in the form either of express rules or the analogous application of existing provisions. Lastly, the applicant contends that it is the overlapping of the various national benefit schemes, which is the result of Community law, that has led to the problem at issue in this dispute. For that reason, it cannot be assumed either that this is a fictitious dispute or that the questions asked are hypothetical.
48. The reference for a preliminary ruling must therefore be considered to be admissible.
B ─ Merits
49. It is clear that neither Regulation No 1408/71 nor Regulation No 574/72 lays down explicit rules on the limitation of claims for the recovery of sums paid though not due. That can hardly be an oversight on the part of the Community legislature. The Community legislature has been acutely aware of the problems connected with the reassessment of benefits, on the one hand, and the possibility of recovering benefits paid though not due, on the other, together with the associated issues relating to the limits on the right to reclaim such benefits. This can be seen from Article 49 of Regulations No 1408/71 and No 574/72 and Articles 111 and 112 of Regulation No 574/72. (20) The fact that there are no rules on limitation derives rather from the underlying principles of the coordination effected in this area. According to those principles, it is essentially for the Member States to organise their own social insurance schemes, in terms of both content and procedure. The role of Community law in that context is to establish the principles to be followed when various national schemes are applicable. The rules governing the recovery of sums paid though not due and the applicability of any limitation periods are therefore, in principle, a matter for the legislature of the Member State concerned.
50. Thus, as long ago as 1974, the Court, in its judgment in Rzepa , (21) duly held as follows with regard to Regulations No 3 and No 4, the precursors to Regulations No 1408/71 and No 574/72: In any case, as the system embodied in Regulations Nos 3 and 4 rests on mere coordination of national legislation in the field of social security and does not affect the rules on limitation laid down by such legislations , it was not absolutely necessary that these regulations should lay down rules either on limitation or on time limits. ...As Article 34(3) is integrated with the provisions of national social security laws and supplements them, payments made on this dual basis do not arise only by virtue of Community law, from which it follows that any limitation or time limit which may apply must, in the present state of the law, be dictated by national social security law . (22)
51. It cannot be assumed from this, however, that national law can be applied to situations falling within the scope of Community law without influence from Community law. As has already been stated in the observations of the parties to the proceedings, the Court has consistently held (23) that the principles of equivalence and effectiveness must be observed when national law is applied to situations governed by Community law.
52. In the judgment in Edis , (24) for example, the Court held that the diversity between national systems for refunding national charges levied but not due derives from the lack of Community rules in that field. The Court said: ... it is for the domestic legal system of each Member State to designate the courts and tribunals having jurisdiction and to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derive from Community law, provided, first, that such rules are not less favourable than those governing similar domestic actions (principle of equivalence) and, second, that they do not render virtually impossible or excessively difficult the exercise of rights conferred by Community law (principle of effectiveness).
53. In addition, observance of the principle of equivalence presupposes that the procedural rule at issue applies without distinction to actions alleging infringements of Community law and to those alleging infringements of national law, with respect to the same kind of charges or dues. (25)
54. If that statement is applied to this case, it is possible to say the following: observance of the principle of equivalence presupposes that the provisions at issue apply without distinction to legal situations arising under the application of Community law and to those based solely on national law, with respect to the same kind of benefits.
55. On that basis, the abovementioned exemption rules laid down in Article 80 of Royal Decree No 1422/1924, Article 52 of Law No 88/1989, Article 13 of Law No 412/1991 and Article 1(260) et seq. of Law No 662/1996 should be applicable to the applicant's situation also.
56. The INPS's submissions with regard to the applicability of the exemption rules are ambiguous. On the one hand, it points out that it ─ like the administrative appeal body before it ─ took the view before the national court that Article 13 of Law No 412/1991 is not applicable to a case such as the applicant's. Elsewhere in its written submissions, however, it contends that, in its defence before the referring court, it, like the administrative appeal body, recognised that the provisions of Article 1(260) et seq. of Law No 662/1996 are applicable, and that circulars No 96 of 1997 and No 84 of 2002 also provide for the applicability of the exemption rules.
57. It is of course ultimately for the national court to apply the national provisions to the dispute. Nevertheless, from the point of view of Community law, it must be ensured that the alleged inapplicability of certain provisions is not based either directly or indirectly on the fact that a legal rule or a legal situation falls within the scope of Community law. The decisive factor must be whether the situations governed by the provisions in question are comparable.
58. The fact that the pension supplement to increase the benefit to the level of a minimum pension has a separate legal basis, that is to say, in this case, Article 8 of Law No 153/1969, while purely national benefits are, if necessary, increased to the level of a minimum pension in the same way but on a different legal basis, (26) must not be taken as grounds for treating the payment differently should it have to be recovered.
59. Even the warning that the pension assessment under Article 8 of Law No 153/1969 is provisional does nothing to change that view. It is true that the benefit assessment is provisional in so far as a change of circumstances in the form of the grant of benefit by another institution has an impact on the applicant's entitlement which then justifies a recalculation of the national benefit. This, however, is a phenomenon inherent in the rules for calculating benefit, and occurs both at the level of Community law and in the domestic legal system. In the context of Community law, this is borne out for example by Articles 49 and 94 et seq. of Regulation No 1408/71, which refer at several points to the reassessment of benefit. This happens in the domestic legal system as well, however. At the hearing, in response to a question from the Judge-Rapporteur, the issue of the overlapping of various benefits granted by national institutions was discussed, and it was expressly confirmed that it is entirely possible for a person to receive pro rata pension payments from various national institutions.
60. Until such time as the change in the circumstances of fact and law occurs, however, an assessment under Article 8 of Law No 153/1969 must also be regarded as final. The fact that a reassessment will be necessary following the change of circumstances and that a belated reassessment may in certain situations lead to overpayment is a separate issue.
61. Of relevance in this context is judgment No 1967 of 22 February 1995 of the Corte di Cassazione, as cited by the Italian Government. In that judgment, the Corte di Cassazione describes Article 8 of Law No 153/1969 as a specific provision. It also states that, for the purposes of the recovery of sums paid though not due, that legal basis takes precedence over the general legal basis contained in Article 2033 of the Codice Civile. To that extent that judgment cannot be criticised. However, the further conclusion it draws, that the rules for effecting recovery of sums paid though not due in the field of social security, such as, for example, those contained in Article 52 of Law No 88/1989, the material legislation in the aforementioned case before the Corte di Cassazione, are not applicable precisely because of the specific nature of the legal basis, is highly questionable from the point of view of Community law. That is because the legal basis for accrual of the recovery claim, on the one hand, and the rules for effecting such recovery, on the other, must on that premiss be separated. Under the principle of equivalence, the rules for asserting recovery claims arising from the concurrent application of various national legal systems may not be less favourable than the rules for similar recovery claims arising from purely internal situations.
62. The submission that the assessment was provisional cannot, therefore, be put forward as a valid argument against application of the national rules governing exemption from claims for the recovery of sums paid though not due in the field of social security. Consequently, the specific legal basis for any claims for the recovery of sums paid though not due must not lead to discrimination, as regards the rules for effecting recovery, in relation to claims for the recovery of sums paid though not due in the context of purely internal pension situations. The exemption rules are therefore fully applicable as to their substance to claims for the recovery of sums paid though not due on the basis of Article 8 of Law No 153/1969 also.
63. The dispute pending before the referring court could conceivably be satisfactorily resolved here and now by means of the unrestricted application of the exemption rules. The criteria for non-applicability of those rules are based exclusively on fraudulent conduct on the part of the person in receipt of the pension. Strictly speaking, it would seem that such conduct can be ruled out in this case. After all, not only was it the responsibility of the competent institutions, in the course of the reciprocal exchange of information, to ensure that no significant overpayments ensued, but also, according to his own account of the facts, the applicant actually informed the Italian institution by means of a letter of 18 October 1988 from the Patronato A.C.L.I., that he had started to receive a Luxembourg pension.
64. It is only in the event that the applicability in principle of the exemption rules does not lead to a satisfactory resolution of the case that the question expressly raised, whether a limitation period in respect of the recovery of sums paid though not due in the field of social security can be inferred from Community law, needs to be answered.
65. In the context of the principle of equivalence, it also seems relevant that, in purely internal situations, it is not possible for such long periods of time, in this case some 13 years and considerably longer in others, (27) to elapse before recovery is effected. The fact, moreover, that this dispute is not an isolated case is confirmed by the Austrian Government's submissions. Article 13(2) of Law No 412/1991 provides that the circumstances of persons in receipt of a pension must be reviewed annually and that any adjustment necessary on the grounds of benefits paid though not due be made within a year. The different administrative treatment of benefit entitlements arising from the concurrent application of various national administrative systems must not lead to such blatant discrimination against the person entitled to a pro rata pension from another Member State.
66. It should not be overlooked here that the concurrent application of two or even more national benefit schemes can complicate the administrative treatment of the circumstances of persons in receipt of a pension. It is for that very reason that Community law governs not only the rules applicable to the practical aspects of the concurrent application of various benefit schemes, such as, for example, the procedures for calculating pensions laid down in Article 46 et seq. of Regulation No 1408/71, but also the administrative aspect of such situations, such as, for example, the reciprocal obligation on the institutions involved, under Article 49 of Regulation No 574/72, to provide each other with information immediately in the event of any changes in the grant of benefits.
67. It must be conceded that, in this case, the reason it took so long to effect recovery lay in the initial failure by the Luxembourg institution to report the fact that the Luxembourg pension had become due. However, where national law provides for an automatic annual review in the case of purely internal pensions, any substantial disadvantage suffered by an individual as a result of the fact that a similar practice is not adopted where only a pro rata pension is granted must inevitably be at odds with the principles governing the application of Community law.
68. In this case, the Italian institution did not submit an inquiry to the Luxembourg institution, in the context of such a review, until September 1998, that is to say over 10 years after the Italian partial pension had first been awarded. The Italian institution would have had several reasons to make an inquiry earlier.
69. In 1987, the Luxembourg institution had already taken steps in its capacity as investigating institution. (28) The Italian institution had been informed by means of form E 202, which bore an INPS receipt stamp of 4 March 1987 and a date of issue from the Luxembourg institution of 23 July 1985 (!), that the applicant had made a pension application first on 11 July 1985 and then again on 5 February 1987. (29) That form also shows that the applicant had applied for a pension in France and in Luxembourg. (30) The Italian institution, for its part, did not start to pay the partial pension until after the applicant had turned sixty. It must therefore have realised that it would not be too long before benefits were due from the French and Luxembourg institutions as well.
70. It is not without interest to note here that, according to the applicant's submissions, the Italian institution was actively informed in a letter from the Patronato A.C.L.I. dating back to October 1988 that the Luxembourg pension had been awarded. The Court has a photocopy of that letter as Annex 5 to the application in the documents submitted to it by the referring court. It is true that the INPS denies having received the letter, so that no further inferences should be drawn from it.
71. The fact remains, however, that the Italian institution had reason to take action with regard to the provisional pension assessment and, if necessary, to make inquiries with the Luxembourg institution, especially since such inquiries are provided for by law in the case of purely internal pensions.
72. The clear discrimination which that failure to act caused to be perpetrated against the applicant, as compared with a person who receives a pension solely on the basis of the national legislation, is, in view of the conditions laid down by that legislation, contrary to the Community-law principle of equivalence. (31) In so far as the principle of effectiveness states that the exercise of rights conferred by Community law must not be rendered excessively difficult, the consequences of that situation can be seen as an infringement of that principle also.
73. If this case cannot be settled by applying in full the national rules on exemption from the recovery of sums paid though not due in the field of social security ─ which is a matter for the referring court to decide ─, the most pressing question is how to deal with the practice which infringes the Community principles of equivalence and effectiveness.
74. In that regard, consideration should indeed be given to applying, by analogy, the two-year time-limit laid down in Article 94 et seq. of Regulation No 1408/71. The two-year time-limit gives expression to the requirement of legal certainty. In the context of Regulation No 1408/71, it serves primarily to protect the social insurance institution from being faced with unexpectedly high backdated liabilities. A person in receipt of a pension is also worthy of the same protection, however. (32) Where a person receives benefits in good faith, he should not be the subject of recovery claims dating back more than two years. These considerations hold good of course only in so far as there are no more favourable national rules.
VI ─ Conclusion
75. In the light of the foregoing considerations, I propose that the questions referred for a preliminary ruling be answered as follows:
(1) A provision of national law, which provides for the recovery of sums paid though not due arising from the application of Community law without any time-limit is incompatible with the objectives of Council Regulations (EEC) No 1408/71 and No 574/72. The principle of equivalence requires that national exemption rules applicable to comparable situations of a purely internal nature should also be fully applicable to situations governed by Community law.
(2) The two-year time-limit provided for in Title VII of Regulations (EEC) No 1408/71 and No 574/72 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community, which applies to the retrospective enforcement of rights conferred by those regulations, can ─ in so far as there are no more favourable provisions under the national law of the Member State concerned ─ also be applied, by analogy, to the review and reassessment of pro rata pension payments, where a practice in breach of the principles of equivalence and effectiveness would otherwise lead to discrimination against the recipient of a pro rata pension as compared with the recipient of a purely national pension. The two-year time-limit runs from the date on which the person in receipt of the pension was first notified that the sums paid though not due are to be recovered.
1 – Original language: German.
2 – In the version contained in Council Regulation (EC) No 118/97 of 2 December 1996 amending and updating Regulation (EEC) No 1408/71 (OJ 1997 L 28, p. 1).
3 – In the version contained in Council Regulation (EC) No 118/97 of 2 December 1996 amending and updating Regulation (EEC) No 574/72 (OJ 1997 L 28, p. 1).
4 – Judgment in Case 35/74 Rzepa [1974] ECR 1241.
5 – Judgment in Case C-199/88 Cabras [1990] ECR I-1023.
6 – Judgment in Case 24/75 Petroni [1975] ECR 1149.
7 – Judgment in Case C-443/93 [1995] ECR I-4033.
8 – With regard to the statement of the facts, see point 14 et seq. above.
9 – See, for example, the judgment in Case C-231/96 Edis [1998] ECR I-4951.
10 – Judgment in Cabras (cited above in footnote 5).
11 – Opinion in Case C-199/88 Cabras [1990] ECR I-1039, points 31 and 32.
12 – See the judgment in Case 68/69 Brock [1970] ECR 171.
13 – See, in particular, the judgment in Case 40/74 Costers and Vounckx [1974] ECR 1323.
14 – For example, the judgments in Case 33/76 Rewe [1976] ECR 1989, Edis (cited above in footnote 9), Case C-228/96 Aprile [1998] ECR I-7141, and Case C-88/99 Roquette Frères [2000] ECR I-10465.
15 – Judgment in Case C-128/93 Fisscher [1994] ECR I-4583.
16 – Judgments in Case C-472/99 Clean Car Autoservice [2001] ECR I-9687, paragraph 13, and Case C-306/99 BIAO [2003] ECR I-1, paragraph 88.
17 – See the judgments in Case C-424/97 Haim [2000] ECR I-5123, paragraph 58, and Case C-366/98 Geffroy [2000] ECR I-6579, paragraph 20.
18 – Judgment in BIAO (cited above in footnote 16), paragraph 89.
19 – Judgment in Case C-83/91 Meilicke [1992] ECR I-4871, paragraph 25.
20 – On the content of those articles, see points 2, 4 and 5 above.
21 – Case 35/74 (cited above in footnote 4).
22 – See the judgment in Rzepa (cited above in footnote 4), paragraphs 12 and 13, my emphasis. Article 34(3) of the then Regulation No 4 concerned revocable advances.
23 – See, inter alia , the judgments in Rewe (cited above in footnote 14), paragraph 5, Case 45/76 Comet [1976] ECR 2043, paragraphs 12 to 16, Case 68/79 Just [1980] ECR 501, paragraph 25, Case 199/82 San Giorgio [1983] ECR 3595, paragraph 14, Joined Cases 331/85, 376/85 and 378/85 Bianco and Girard [1988] ECR 1099, paragraph 12, Case 104/86 Commission v Italy [1988] ECR 1799, paragraph 7, Joined Cases 123/87 and 330/87 Jeunehomme and EGI [1988] ECR 4517, paragraph 17, Case C-96/91 Commission v Spain [1992] ECR I-3789, paragraph 12, Joined Cases C-6/90 and C-9/90 Francovich and Others [1991] ECR I-5357, paragraph 43, and Case C-312/93 Peterbroeck [1995] ECR I-4599.
24 – Cited above in footnote 9; paragraph 34.
25 – Judgment in Edis (cited in footnote 9), paragraph 36.
26 – According to the Italian Government's submissions, this is Article 2 of Presidential Decree No 488 of 27 April 1968.
27 – At the hearing, mention was made of 30 years.
28 – With regard to this term, see Article 41 of Regulation No 574/72.
29 – See Annex 1 of the INPS's submissions, section 12.
30 – Cited above in footnote 29, section 13.
31 – No regular review, recovery within a year.
32 – On this issue, see also the Opinion of Advocate General Jacobs in Cabras (cited above in footnote 11), point 32.
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